Posted on 11/13/2006 4:20:02 AM PST by xtinct
Also move-up buyers. If they can't sell their present home, they leave the market.
It is happening a lot.
Once investors and the move-up market shuts down, there goes a large feed into the market.
From my own experience, yes, people are walking away from deposits. When they do the math---compare the deposit to the possibility of paying double mortgages for several months (or,worst case, like my neighbors, a year or more)---some people bite the bullet and walk away.
Some mistakes are expensive. Others are even more expensive.
Oh NO, could it be that it's the slimey House "flippers"that are backing out??
West Michigan is one of those places that I'd really like to check out (when I get the time). Everything I've read/heard about it makes it look very attractive. Am I right?
Darn - will this affect Lexus & cell phone sales to REALTORS (TM REG US PAT OFF)?
generally, a RE contract is enforceable, and a buyer walkin out loses deposit, period. these extra approvals, contingencies u refer to are tellin me 'the agreement' ain't no contract to buy, but indicates a simple show of earnest money.
Except when they believe they ain't done falling. We signed a contract to build a house more than a year ago. The builder encountered a basement flooding problem that they could not fix (Or would not)and we cancelled the contract.
The builder was unable to find another buyer at our original purchase price and ultimately had to shell out almost 100K to fix the problem and then discount the house more than another 100K to find a buyer.
Or if your deposit was $15K, but the mortgage on the new house is $3K a month, your present home, which has a mortgage of $3K a month has been on the market 8 months with nary a bite, you're looking at paying $6K a month for "housing" (one vacant) until you sell your present home.
Thus, just looking at the "extra" mortage payment, in 5 months you will have paid out cash in the amount of $15K (the deposit).
Unless you have some concrete reason to conclude your home suddenly is going to sell within the next 5 months, when for the last 8 months no one was been interested in it, you could easily get in deeper than $15K.
That's where I'm at. We've told the agent we're going to pull the house middle of this week unless we get an offer.
Of course, after resigning ourselves to that, and having to back out of our contingent deal to buy a larger place (more suitable for the kids), we get a call last night that someone is going to submit a contract today. Yea! *fingers crossed*
Thanks and I'm glad word is getting around to people outside of the state.
It's a major crisis impacting every single property owner in Florida. It's a financial disaster of third-world proportion and it's breaking people I've known for years. They are giving up and those who can sell are leaving, others are simply desperate.
People have been making off the cuff comments about letting the free market fix the problem without considering what has actually happened here. For example, my friend's policy went from 4.4K to 10.5K. That's just his insurance. For those without homestead exemptions their taxes skyrocketed as well. The problem is that many families cannot absorb a 20-25% increase in their mortgage or business expenses overnight.
How do you handle that problem when it impacts millions upon millions of families and businesses at the same time? Get out? Not when everyone wants to dump their home at the same time. Then new buyers have to deal with new taxes at the purchase rate which is astronomical. While I might pay 3K in taxes, the next person who buys this house may pay in excess of 8K. Result? The economy in Florida isn't geared to sustain families requiring a mortgage to buy a home down here. Those who don't need a mortgage find that taxes and insurance amounts to the same or greater level of living expense.
The financial ramifications are only beginning to surface here in Florida. We are just beginning to bleed.
" Some mistakes are expensive. Others are even more expensive. "
Remember "equity harvesting?"
How many people got sucked into refinancing their homes, and taking their equity out in cash - which they promptly spent?
How many of them are now, with falling prices, in possession of 'assets' that actually have *negative* equity?
How many of them will eventually decide that foreclosure is preferable to selling at a loss?
How many properties - which can only be sold at a loss - can financial institutions absorb?
Just asking.....
(Ignore basic economics at your peril -- ignore common sense at your greater peril...)
The flippers ran into trouble a year ago.
Representative of this is a house in my neighborhood which was sold 3 times in 3+ years (a realtor got all the MLS records for me). The first two sales brought profits of 30 to 40 percent; the third about 20; and the last was an attempt at a razor-thin flip which left the house on the market for a year (the RE signs are finally down, but it still looks unoccupied).
That last guy was left holding the bag. I think prices will have to return to 2004 levels to sell the property.
When the market finally gets that painful and dismal, real investors will show up again. They tend not to buy at market tops.
Same here in the Charlotte area of NC. The development I moved into 3 months ago are selling as fast as the builder can put them up. There have been a few buyers that have backed out of the deal.
That may have been the strongest "sell" signal he'll ever see in his career.
Exactly. I know many people who thought their house would sell at x $$ b/c the guy across the street sold last year at x $.
But they can't sell at all. Same type of beautiful home. Same desirable neighbor. No buyers.
So in market terms (liquidity), their house is worth zero right now.
If there's one thing I learned from the stock market crash of 2000, it's that you don't buy a stock on the way down. Just take a look at the chart of California housing prices from January 2003 to January 2006. Bloated, inflated bubble waiting to burst.
Interest rates seem to be staying basically the same, though mortgage companies ads tout falling interest rates!
The mortgage companies have NO business. They either have to slash prices on their products or shut down some of their operations.
I know a couple folks who have sold their homes in the past year. Each had three to five contracts fall through, and they weren't selling to investors, but to other home buyers.
The problem was not the price of the house, but when taxes and insurance, were figured in, the folks realized they couldn't afford the house.
Tax assessments have sky-rocketed along with property values, and until the assessments come down (does that ever happen, LOL) I think it will slow the market in our area.
Also, I know folks who have been investors (not "flippers", but owners of rental properties.) They are getting rid of their property too because of tax assessments. Their rent is not covering their expenses anymore due to rising tax assessments/taxes and rising insurance.
They'll announce 'cost cutting' measures to only assess a house every four years. Tax assessors love it when property values climb, but they have sneaky ways of ignoring it when prices soften. Of course, lenders who are selling foreclosed homes help them, they want to maintain a high official 'sales' price, but pay for all closing costs, give a sweetheart loan package, and even pay for moving costs when things get desperate. Anything to show the next sucker that the house 'is really worth' what is being asked for it, the next time they have one to sell in that neighborhood.
Michigan? Not the norm...
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